Crash in the housing market

Crash in the housing market

Introduction

Housing Market

Housing market can be described as it is the purpose of economic techniques to the markets of real estate. It can also describe, predict the prices, explain demand, and supply. Housing market can also illustrate purchase and they sell the property to buyers and sellers through the general market of house. This purchase and sold can be directly by the owner of the house or it can also sell through brokers. There is narrower scope of housing and economic field. It also concentrating on residential real estate markets and it focuses on the structural and business changes of the industry. (De Leeuw, F.1971)

Discussion

There are the six key participants in the markets.

1.User

The user of a house can be the owner and user as well as a renter of the house. They mostly purchase houses or commercial houses as an investment or sometimes they also live in that house or sometimes they utilize it as for business purpose.

2.Owner

Owner of the house is pure investor. Owners do not consume the house that they purchase. Mostly they rent out the property to someone else.

3.Developers

Developers are those people who prepare raw land for building and this building can be the new product for the market.

4.Facilitators

Facilitators can be include real estate lawyers, brokers, banks and others that make possible to purchase and sale of the property.

5.Renovators

Renovators supply the refurnish buildings to the market.

6.Renter

Renters are pure consumers because they take the house for their personal consumption. The user, renter and owner of the property involve in the demand side of the market whereas the renovators and developers involve in the supply side of the market. (Olsen, E.O. 1969)

Crash in the housing market

Crash in the housing market has many factors. It is characterizing by the rapid decrease in the valuation of the property.

Factors of the housing market crash

There are so many factors that played a great role into the housing crisis are:

1.Realtors want to earn commission, so they encourage people to purchase property.

2.Borrowers do not have enough money to purchase a house, but they want more house than they could afford.

3.As prices of property increases so home owners are very happy and they wanted to sell their property in order to get profit.

4.Home appraiser would over value a home so that it would qualify for the mortgage.

5.Countries and cities take advantage of increase in price of property.

6.The media enjoy the increase in prices because media is totally depending on advertising to pay the bills.

7.When the prices of homes are over then it would be a bad investment for investors.

The U.S. is rapidly growing crisis on the real estate market. Thus, in comparison with the peak in June 2006 at the moment the prices for residential real estate in the country have fallen by a quarter. The worst performance in this market was only during the Great Depression. Then for five years was the fall in prices by 25.9%.

Things are not that bad in the housing market in the ...